Tyson to sell ownership in Dynamic Fuels
AMES, Iowa – Tyson Foods, Inc. plans to sell its 50 percent ownership in Dynamic Fuels, LLC to Renewable Energy Group, Inc. (REG). Tyson and Syntroleum formed Dynamic Fuels in 2007 as a joint venture. The Geismar facility, completed in 2010, was the first large scale renewable diesel biorefinery built in the US.
Under the terms of the agreement, an REG subsidiary would acquire Tyson Foods' stake in Dynamic Fuels for approximately $18 million in cash at closing and up to $35 million in future payments tied to production volume at the Geismar, La., biorefinery over a period of up to 11 years. REG will also repay approximately $12 million in debt to Tyson Foods at closing.
“Selling our interest in Dynamic Fuels to REG provides capital for Tyson to redeploy into other opportunities,” said Andrew Rojeski, vice president-Renewable Energy for Tyson Foods. “REG is a long-term customer of ours, buying fats, oils and greases to make renewable fuel, and we hope to continue that relationship.”
Completion of the deal is contingent upon REG closing its December 2013 agreement to acquire all assets belonging to Syntroleum Corp. If the deal goes through, REG will have full ownership of Dynamic Fuels and its 75 million gallon per year renewable diesel biorefinery in Geismar.
REG also agreed to replace the letter of credit Tyson Foods obtained to support issuance of or financing sufficient to refinance $100 million in Gulf Opportunity Zone Bonds. REG may seek to use existing cash on hand or other financing vehicles, including public or private debt or equity, to satisfy this condition. Closing is also subject to other customary closing conditions.
“Upon closing, this is another milestone for REG in growing our core advanced biofuels business,” said Daniel J. Oh, REG president and CEO. “It gives us the opportunity to further expand our production capacity into new product lines, while growing our overall advanced biofuel manufacturing capability, and bringing on other renewable chemical applications.”
REG currently owns eight operating biodiesel refineries in Iowa, Illinois, Minnesota and Texas with a combined production capacity of 257 million gallons of renewable biodiesel. With the addition of the Geismar facility, the company’s total biofuel capacity would increase to 332 million gallons.